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Applying 'Supply And Demand' Business Principles To Treat Infectious Diseases Worldwide

Date:
November 25, 2008
Source:
American Society of Tropical Medicine and Hygiene
Summary:
Treating infectious diseases while meeting escalating costs to do so continues to pose worldwide challenges, with one of the main issues being the ability to provide an adequate supply of drugs to treat infectious diseases.

Treating infectious diseases while meeting escalating costs to do so continues to pose worldwide challenges, with one of the main issues being the ability to provide an adequate supply of drugs to treat infectious diseases.

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While this may sound simple, ensuring a sufficient supply of effective drugs to each country that needs them remains a challenge until the demand for those drugs is accurately predicted and understood. A new and improved scientific method to forecast the demand for a key anti-malarial treatment may be the key for how science and economics can and should intersect to maintain low-cost, high-quality drugs to combat infectious diseases.

According to Justin Cohen, M.P.H., Ph.D., such a forecast is crucial in order to supply enough medications to meet demand -- especially since demand has the potential to rise very rapidly as old drugs lose effectiveness and governments switch to new drugs.

Dr. Cohen and his team from the Clinton Foundation started looking for patterns in how funding for drugs is disbursed around the world and used those patterns to forecast how future funding will look. The team used a similar approach to forecasting the demand for HIV/AIDS treatments in Africa. It worked so well that the team decided to set its sights on the treatment of malaria, which now affects 300-500 million people per year – 1 million of whom die from the disease. The cost to Africa's economy alone is estimated to be $12 billion per year.

The quantitative method centers on the acquisition of a chief anti-malarial ingredient, artemisinin, which comes from plants and is used in malaria treatments. One of the challenges with artemisinin-based combination therapy (ACT) is it can take up to two years for the plants to grow, extract the artemisinin and then for pharmaceutical companies to develop the drugs. If demand isn't accurately predicted, it can lead to a shortage of drugs, driving up the cost for countries to buy them. Conversely, an oversupply can lead to drugs "going bad" as they sit on the shelf past their expiration dates. This is why forecasting demand is vital.

Dr. Cohen will explore the following points at the ASTMH Annual Meeting, December 7-11 in New Orleans:

  • The anti-malarial world, from farmers up to drug producers, was disorganized and inefficient because there was little understanding of the demand for treatments. Past forecasts, including by the World Health Organization, vastly overstated expected demand;
  • The first-ever robust and scenario-based global forecast of ACT demand, which shows that demand will at least double over the coming four years and could grow by as much as 327 percent to over 400 million treatment packs if a global ACT subsidy is launched;

The forecast helped to support the signing of agreements with suppliers to reduce the volatility in artemisinin supply, reduce drug prices, and help ensure access to high-quality, low-cost drugs.


Story Source:

The above story is based on materials provided by American Society of Tropical Medicine and Hygiene. Note: Materials may be edited for content and length.


Cite This Page:

American Society of Tropical Medicine and Hygiene. "Applying 'Supply And Demand' Business Principles To Treat Infectious Diseases Worldwide." ScienceDaily. ScienceDaily, 25 November 2008. <www.sciencedaily.com/releases/2008/11/081117131707.htm>.
American Society of Tropical Medicine and Hygiene. (2008, November 25). Applying 'Supply And Demand' Business Principles To Treat Infectious Diseases Worldwide. ScienceDaily. Retrieved March 28, 2015 from www.sciencedaily.com/releases/2008/11/081117131707.htm
American Society of Tropical Medicine and Hygiene. "Applying 'Supply And Demand' Business Principles To Treat Infectious Diseases Worldwide." ScienceDaily. www.sciencedaily.com/releases/2008/11/081117131707.htm (accessed March 28, 2015).

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